The £95,000 cap on public sector exit payments was signed into law last night and will come into force on November 4.

Under the new law, any worker over the age of 55 who is made redundant will be affected by the cap, which will include the payment employers make to pension funds.

Trade union Unison said this was ‘unfair, unjustified and causing anxiety’ among ‘thousands’ of long-serving council staff who would suffer in retirement as a result.

Unison’s head of local government, Jon Richards, said: ‘We’re outraged that, despite knowing older, long-serving staff would suffer, ministers simply ploughed on.

‘The message this attack sends to public sector workers, many of whom are on the frontline as COVID infection rates rise, is that, despite all you’ve done, you don’t matter.

‘It’s galling that, as ministers divert billions of pounds to failing private companies to fight the pandemic, the people risking all to keep us safe have been treated so callously.’

Ministers have insisted that employees would still benefit from a ‘significant level of compensation’.